A firm is planning to start a new project. The firm spent$45,000 on a market study and $30,000 on consulting three monthsago. If the firm starts the project, it will spend $600,000 for newmachinery, $50,000 for installation, and $20,000 for shipping. Themachine will be depreciated via the 5-year MACRS depreciationmethod (20.00%, 32.00%, 17.20%, 11.50%, 11.50%, and 5.8%,respectively, from Year 1 to Year 6). The expected sales increasefrom this new project is $450,000 a year, and the expectedincremental expenses are $180,000 a year. In order to start thisnew project, the company has to invest $100,000 in working capital.The marginal tax rate is 34%. What is the incremental cash flow ofthis project in Year 2?
A)$220,013
B)$217,382
C)$102,142
D)$224,107
